If you're interested in broad exposure to the Technology - Software segment of the equity market, look no further than the iShares Expanded Tech-Software Sector ETF (IGV), a passively managed exchange traded fund launched on 07/10/2001.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Software is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.
Index Details
The fund is sponsored by Blackrock. It has amassed assets over $6.49 billion, making it one of the largest ETFs attempting to match the performance of the Technology - Software segment of the equity market. IGV seeks to match the performance of the S&P North American Technology-Software Index before fees and expenses.
The S&P North American Expanded Technology Software Index comprises of North American equities in the software industry and select North American equities from interactive home entertainment and interactive media and services industries.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.41%, making it one of the cheaper products in the space.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector--about 96.80% of the portfolio.
Looking at individual holdings, Microsoft Corp- (MSFT) accounts for about 9.45% of total assets, followed by Oracle Corp- (ORCL) and Adobe Inc- (ADBE).
The top 10 holdings account for about 60.04% of total assets under management.
Performance and Risk
Year-to-date, the iShares Expanded Tech-Software Sector ETF has gained about 2.87% so far, and is up about 16.09% over the last 12 months (as of 07/31/2024). IGV has traded between $65.84 and $88.93 in this past 52-week period.
The ETF has a beta of 1.06 and standard deviation of 27.73% for the trailing three-year period, making it a high risk choice in the space. With about 119 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Expanded Tech-Software Sector ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IGV is a great option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
SPDR S&P Software & Services ETF (XSW) tracks S&P Software & Services Select Industry Index and the Invesco AI and Next Gen Software ETF (IGPT) tracks STOXX WORLD AC NEXGEN SOFTWARE DEV ID. SPDR S&P Software & Services ETF has $360.99 million in assets, Invesco AI and Next Gen Software ETF has $369.41 million. XSW has an expense ratio of 0.35% and IGPT charges 0.60%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.
Get it free >>iShares Expanded Tech-Software Sector ETF (IGV): ETF Research Reports
Microsoft Corporation (MSFT) : Free Stock Analysis Report
Oracle Corporation (ORCL) : Free Stock Analysis Report
Adobe Inc. (ADBE) : Free Stock Analysis Report
SPDR S&P Software & Services ETF (XSW): ETF Research Reports
Invesco AI and Next Gen Software ETF (IGPT): ETF Research Reports
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
